With precious metal prices surging late last week and early this morning, the demand for these metals is forcing many dealers in precious metals into the difficult position of not filling orders or holding them to wait for the market stabilizes a bit.
Over the weekend, APMEX CEO Ken Lewis sent an email to customers outlining the difficult situation the company faces and that patrons will face longer-than-normal delays in shipping as the company works to obtain as much precious metal as possible to fill the orders. APMEX is an Authorized Purchaser of bullion from the United States Mint.
Indeed, the company saw so many new customers and such a “extremely high” demand for these metals that the company had to make the decision to stop silver sales over the weekend.
Here is the complete text of Mr. Lewis’ email.
In the last week, we have seen a dramatic shift in Silver demand from our customers. For example, the ratio of ounces sold per day was running about two times earlier in the week and closer to four times the average demand by the end of the week. Once markets closed on Friday, we saw demand hit as much as six times a typical business day and more than 12 times a normal weekend day. Combined with the extremely high demand levels, we are also seeing a surge in new customers. On Saturday alone, we added as many new customers as we usually add in a week.
Any Precious Metal dealer will take a long position in the futures market to protect against spot price exposure when the markets open. We do this because it is our goal not to take a speculative position on metal. The weekends are unique as we are not able to real-time hedge our position. We took an aggressive position this weekend, but clearly could not have predicted the volumes that were seen. We have partnerships around to world that allowed us to cover these long positions, but only to a point. Once we exceeded our comfort levels, we had little choice but to stop the sale of Silver on our website. This was a difficult decision to make and unprecedented in our history.
As we evaluate the markets, it is difficult to know where Silver’s price and demand will go in the coming day and weeks. APMEX is highly capitalized and has more than $150 million in inventory to support demand. We have made strategic decisions to procure additional metal, locking up any metal we can find in the market place. We suspect premiums will rise and rise quickly, as we are seeing significant increases in our costs, when we can even locate the metal. It is also highly likely that we will need an additional day or two to fill orders based on current order counts. The one guarantee we can make to our customers is that you will only be sold metal that is on-site, or we have procured the metal with a firm commitment date from our partners. In markets like this, we feel this is the best approach a retailer can take, as no one can predict product availability.
We want to thank our customers for their patience and understanding during these turbulent times. APMEX prides itself on best in class service and delivering on promises to our customers.
CEO, APMEXAPMEX Email to Customers
As of this morning, silver was up over $3 to $30 per ounce, its highest level in years with gold now up to $1873 per ounce as of 6:20 AM Mountain. You can track the precious metals market via the charts available on the APMEX site.